Jordan, Germanys sign debt-swap agreement

Jordan and Germany signed a DM25 million ($11.5 million) debt-swap agreement at a 50 percent discount rate on Sunday, October 21.

Jordan and Germany signed a DM25 million ($11.5 million) debt-swap agreement at a 50 percent discount rate on Sunday, October 21, the Jordan Times reported.

The Jordanian finance ministry said in a press release that under the agreement, Jordan will spend DM12.5 million on local development projects, which fall under the Social Safety Net program, while Germany will write off DM25 million of Jordan's debt.

A debt-swap is an alternative form of aid by industrial countries to indebted developing nations. It is the cancellation of external debt in exchange for the debtor country's pledge to repay with local currency or another asset for an agreed investment.

Jordan and Germany have signed five debt swap agreements since 1995 at a total value of over $130 million at a 50 percent discount rate. The swaps were utilized to fund water and social development projects.